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10 Reasons Why Performance Management

Fails and how to remedy them

Posted on March 7, 2011
Below are ten common causes of failure of performance management.
(Adapted from a PhD dissertation Integrated Performance Management Systems by Dr
Marko Saravanja)

1. Lack of integration
Performance management has to be approached from an integrated perspective. Synergy has
to be created between the performance management system and strategic planning, human
resource management processes, organisational culture, structure and all other major
organisational systems and processes. Individual, team and organisational strategic objectives
must be harmonised. Without integration, no performance management system can succeed
on its own, no matter how good the performance management system may be.
2. Design challenges
The performance management system and tools must be designed to address the particular
needs of organisations. The design process should involve thorough consultation with major
stakeholders and especially with future users of the system. Consultation and interaction are
necessary to build trust and relationships with employees and relevant stakeholders. Trust is
an absolute requirement for the success of the performance management system. The new
performance management system should be piloted and thoroughly tested before it is applied
in the organisation. Applying an incomplete system leads to loss of credibility, time, financial
and human resources, and increases resistance to change and low acceptance of the new
performance management system.
People involved in the design of the system must have expertise in performance management
and an understanding of the institutions context. Overreliance on external consultants might
be an expensive way of developing the system, which often has additional negative
consequences of dependency and lack of ownership of the new performance management
3. Lack of leadership support
The implementation of the performance management system has to be supported and driven
by top leadership and management. Leadership has to be committed to implementing the
performance management system. Leaders should be encouraged to develop the capacity to
create a shared vision, inspire staff and build a performance management system that drives
the entire organisation towards a common purpose. Organisations with the best performance

management results have strong value and vision-driven leaders at the top who inspire
people, communicate the vision, take risks, and provide support and rewards.
4. Implementation failure
The change management aspect of performance management should be managed
strategically. The organisations top leadership must drive the change process. Resistance to
change should be managed proactively. A communication process should be put in place
which will explain the benefits of the performance management system, communicate
progress with the implementation and reduce uncertainties, fears and anxieties. Managers
must be encouraged to engage in careful, systematic and professional planning and
implementation of the performance management system. Implementation time frames must
be respected. All documentation and forms must be completed properly and professionally,
especially performance agreements and personal development plans. Mechanisms must be
put in place to ensure the objectivity of performance ratings and judgements, and to reduce
favouritism and bias. Performance management should be a continuous process and not an
activity conducted once or twice a year. Performance feedback should be timely and
continuous. A rewards system, comprising both monetary and nonmonetary rewards, should
be developed to reward high performers. Mechanisms must be put in place to deal with
5. Incompetence
All those involved in the performance management system must possess appropriate
knowledge, attitudes and skills to utilise the system. The following are major skills required:

Development of performance indicators, key results areas, core management

competencies and performance agreements

Measurement of performance indicators

Communication of results and feedback

Monitoring and evaluation of the performance management system.

Proactive training and development interventions should be implemented to ensure that the
users of the performance management system are continuously developed. Special emphasis
should be given to soft skills and the behavioural aspects of performance.
6. Lack of rewards
A reward system that rewards high performance and discourages low and mediocre
performance must be put in place. A comprehensive and holistic reward system, which
includes various rewards such as financial rewards, public acknowledgments, merit awards,
promotions, greater work responsibilities, learning and study opportunities, should be
developed and communicated to staff. Much greater emphasis must be given to non-monetary
rewards. Mechanisms must be put in place to take corrective action against low performers.
7. Communication challenges

A proactive communication strategy and process must be followed throughout the

implementation of the performance management system. In the planning and design phases,
good communication will enable buy-in from the major stakeholders. In the implementation
phase, good communication will assist with managing resistance to change and building
positive momentum. In the monitoring and evaluation phase, good communication will assist
with learning and reinforcing achievements gained. Users of the system must be trained to
communicate professionally and developmentally during the process of conducting
performance appraisals and when communicating outcomes and feedback. Communication is
one of the most critical success factors of the entire performance management system.
Effective communication requires the provision of relevant information, ensures buy-in from
the users of the system, reduces fears and anxieties, reduces resistance to change, and
generates commitment to the system.
8. Inspiration challenges
The organisations must ensure high levels of staff inspiration. This requires a systematic
approach to addressing the challenges of staff inspiration. It requires continuous investment
in human resources. Staff motivation should not be left unmanaged. If it is left unmanaged,
staff motivation naturally deteriorates. Programmes are required to ensure high levels of staff
motivation and commitment to the organisational vision, which may include a variety of
activities such as team building, strategic planning, family picnics, internal competitions and
awards, learning and development opportunities, behavioural change exercises, attitude
change activities, sport activities, and similar. These programmes must be proactive,
continuous and have a long-term focus on ensuring sustainable levels of staff motivation.
In addition to direct staff motivation programmes, organisations must build an enabling
organisational environment for staff motivation. Organisational development interventions
must be implemented continuously in order to ensure high levels of staff motivation in a
sustainable manner. Special emphasis must be given to culture change programmes to
ensure that the organisational culture is progressive and developmental. Issues of the
objectivity of performance ratings, fairness and equity should be addressed otherwise staff
motivation is compromised.
The organisational structure should be reviewed and issues of power, layers of bureaucracy,
organograms, accountabilities, reporting and communication channels should be analysed.
Obstacles should be removed in order to ensure that structure is not an obstacle to staff
Organisational processes should be streamlined, simplified and made user-friendly to
motivate staff and not to demotivate them with red-tape and bureaucratic procedures.
Proactive communication processes must be put in place to ensure that information is
continuously communicated to the right people. Effective communication reduces fear and
uncertainties and prevents wrong assumptions, gossip, and politics. Performance feedback
should be given timeously and continuously and not once or twice a year following the
performance appraisal process.
Human resource management and development policies, strategies and activities should be
proactive and developmental. They should be designed and implemented to attract, nurture,
develop and retain the best staff. In addition to the development of intellectual capabilities
and technical skills, training and development interventions should emphasise the

development of emotional and spiritual intelligence. A comprehensive reward system should

be implemented, comprising monetary and nonmonetary rewards, to ensure high levels of
staff motivation on a sustainable basis. A reward system should be designed in such a way
that it encourages excellence, discourages mediocrity and addresses non-performance.
Leadership plays a crucial role with regard to staff motivation. It is the main responsibility of
a leader to inspire staff, to ensure that obstacles to staff motivation are removed and to
generate their passion and commitment to the organisational mission. High motivation
generally leads to high performance. Without motivated staff, no performance management
system can be successful, irrespective of how well the system is developed and how
sophisticated performance documents, forms and agreements are.
9. Lack of monitoring
Performance management system implementation must be continuously monitored. Problems
must be detected at an early stage to enable prompt corrective action. Monitoring systems
must be developed to systematically collect information, analyse and interpret it, and use it
for decision-making.
10. Lack of evaluation
The evaluation process must be conducted at regular intervals to enable the detection of
problems at an early stage. The problems identified should be fed back to the design phase.
This will ensure that prompt corrective action is taken to address the identified problems. In
order to ensure the integrity of the evaluation process, it is advisable that an independent
party conducts the evaluation process. In order to be successful, the performance
management system must be continuously evaluated and improved.
The system below on Integrated Performance Management has been developed based on the
identification of major performance management problems, weaknesses and challenges. The
system addresses these problems in an integrated manner and provides long-term solutions.
The solutions are based on practical recommendations from performance management
practitioners. They are underpinned by strong theoretical foundations informed by leading
local and international performance management scholars, experts and consultants.
Based on the above, an integrated performance management system is presented in the
following diagram.